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Directors Confident Ahead of Budget

Australia’s board directors are more confident than they have been in six years, according to a survey by the Australian Institute of Company Directors (AICD) across both the business and not-for-profit sectors.

Australia’s board directors are more confident than they have been in six years, according to a survey by the Australian Institute of Company Directors (AICD) across both the business and not-for-profit sectors.

The bi-annual Director Sentiment Index found that those sitting around Australia’s boardroom tables were feeling “particularly bullish about domestic conditions, with sentiment on investment levels and staff hiring at their highest point since 2011”.

The index measured the opinions and future intentions of directors on a range of issues including the economy, government policy and governance regulations.

More than 30 per cent of those who completed the survey listed their primary directorship as being in the not-for-profit sector.

AICD chairman Elizabeth Proust said that the increase in business sentiment was primarily driven by increasing confidence around domestic and international economic conditions.

“Directors’ confidence in the outlook for the Australian economy rose significantly, as did their expectations around the health of the US and Asian economies. Concerns around global economic uncertainty and a China slowdown also dropped substantially,” Proust said.

“These results show that directors feel buoyed by the economic outlook and are taking a positive growth mindset.

“However, directors remain concerned about the ability of the government and Parliament to drive reform and growth, with 86 per cent rating the current quality of public policy debate in Australia as poor. Directors also ranked less focus on short-termism as the number one measure to boost productivity.”

The AICD last month released a Blueprint for Growth national reform policy which recommended a range of structural reforms to improve public policy debate and encourage long-term thinking including the introduction of fixed, four year terms for the federal government.

Proust said directors rated taxation reform as the most important short-term issue for the federal government to address, followed by energy policy and infrastructure.

“Infrastructure ranked as the top issue for the federal government to address in the long-term, closely followed by climate change, tax reform, an ageing population and energy policy,” Proust said.

The report said: “Given current concerns around housing affordability, directors nominated tighter controls on foreign purchases, a boost to housing supply through streamlined approvals and changes to negative gearing arrangements as the top three measures governments should prioritise to address the issue.

“Directors are concerned with matters of legal and regulatory compliance with it appearing as the third most likely issue to keep them awake at night. Half of directors also feel that the current governance regulations under the Corporations Act are too onerous.”

The AICD NFP leader Phil Butler told Pro Bono News it was “fantastic” that a third of respondents were from the not-for-profit sector “because it really reflects the interest of our members”.

“I think we can pretty well draw the line there that as well as the private sector being more confident with much more of a positive vibe, I think we can say that for the not-for-profit sector as well there is some increasing confidence from the NFP directors,” Butler said.

“Overall there is a better vibe around the place in terms of the economy are the moment.”

However Butler said there were still concerns around regulatory reform and parliamentary challenges.

“There are challenges with the Senate of getting the reform done that is required. I think the #fixfundraising campaign is an example of challenges that continue to face the sector and really create huge inefficiencies for the sector and we need to see change happening there. And directors feel frustrated that we can’t seem to get that push through,” he said.

“Longer term funding agreements is another one that sits at the heart of the sector and enables the sector to be able to plan appropriately and to achieve those longer term outcomes.

“I suspect there is a cyclical nature [to the findings] here. We have seen the worst of the post-global financial crisis. We have seen the move on from the concerns of Brexit and change of [US] presidency and the euro crisis. They are starting to be a little bit into the rear vision mirror now and I think generally there is a bit more of a sense of optimism in the broader community.

“On a personal perspective… the fact that governments are perhaps not talking about the slashing and burning of funds to not-for-profit sector is probably a bit of a positive. The worst of those times seem to be over. Of course we [have to] wait to see what the May budget does from a federal perspective, but there are some positives around that.”

Butler said there were some survey surprises in board responses to long-term issues.

“One big surprise for me was… climate change going from eight to two [in importance]… that is an interesting one from a director’s perspective… it’s obviously an issue that is on the radar,” he said.

“The other one is the aging population. It is still number four on the list of long-term issues that directors are thinking about… the implications of that for client-directed care and the aging population and who is going to support the aging population – they are issues that so many not-for-profit organisations are grappling with now and will be grappling with even more into the future.”

If you have a story about the not-for-profit sector email our news team at news@probonoaustralia.com.au

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